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Andreas Souvaliotis

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Capitalism 2.0: Corporate Social Responsibility Is Not the Enemy of Profits

Posted: 11/08/11 11:19 AM ET

Ashoka, the world's leading incubator of social entrepreneurs, hosted a remarkable conference in Vienna, Austria this past weekend. The event was called "Globalizer" and it involved some of the brightest and most successful social innovators from every corner of the world. I was honoured to be invited along as a judge panellist and a coach for these remarkable achievers. Our simple objective was to assess the scaling potential of their national or regional social-change enterprises and help figure out a way to turn them into global change makers.

As we worked through the list of these exceptionally effective ventures a trend became very clear: The ones that could most easily scale across the world were also the ones that could more naturally morph into for-profit businesses. Profit potential, it seemed, was one of the most obvious growth enablers for some of these very pure and authentic social enterprises!

The cynics and the traditionalists in the not-for-profit space would argue that profit and "good" cannot possibly be synonymous. They have always believed that profit corrupts and quickly overpowers good intentions. They might prefer the historical tension between good and profit because it has driven huge pressure on organizations to "give back" -- and, in an era of mounting social concern among citizens and consumers, it has birthed the recent Corporate Social Responsibility frenzy (or fad) which, in turn, has resulted in a revenue boom for a lot of their charities. But the real question is: So what? Has all this obsession with "giving back," particularly over the past decade, made any difference at all? Is our world meaningfully cleaner, healthier or more balanced now compared to, say, 10 years ago? How do we truly measure ROI for the billions of dollars and volunteer hours every one of us in the corporate world has "given back"?

The brilliant Michael Porter at Harvard Business School argues that we need to embrace a new form of capitalism in order to bring much more meaningful and effective change to our world, while still harnessing our natural instinct to generate more material returns (a.k.a. profit). In fact, seeing what I just saw in Vienna and what I see every day inside my own business, I believe Capitalism 2.0 is already emerging all around us. Good and profit no longer need to be at opposite ends of our behaviour and value spectrum; "giving back" is already starting to fade from the corporate lexicon and is being replaced by Porter's brilliant "shared value" concept. If we don't take anything away from society, then we shouldn't need to give anything back either. The successful businesses of the future will be the ones that figure out how to maximize profit as they maximize their positive impact on the world. Examples abound already -- think of all the terrifically profitable businesses that are making a lot of "good" stuff for our world: clean energy providers, electric car makers, waste recyclers, etc. The more these guys succeed and grow, the more positive their impact on our world and the more money they make. That's the very simple beauty of the shared value model: drive profits by doing good, instead of trying to do good after you've made a profit.

Spending a weekend with some of the world's leading social entrepreneurs convinced me more than ever that we're at the dawn of a beautiful new era. The shared value model will gradually become the foundation of doing business around the world -- and I look forward to the day when we will no longer be able to distinguish some entrepreneurs among us by referring to them as "social."